Bush Rejects Tax on Oil Companies' Profits

techs

Lifer
Sep 26, 2000
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http://news.yahoo.com/s/ap/20060428/ap_on_go_pr_wh/bush

President Bush on Friday rejected calls by some lawmakers for a tax on oil company windfall profits, saying the industry should reinvest its recent gains into finding and producing more energy.

"The temptation in Washington is to tax everything," Bush said in an exchange with reporters in the White House Rose Garden. "The answer is for there to be strong reinvestment to make this country more secure from an energy perspective."


The implication is that oil companies are using their profits to produce more oil and that if we tax those profits they wouldn't be there to produce more oil. Yet, Bushes economic tax plan ENCOURAGES companies to pay dividends and NOT to invest in real assets that increase stock price (and would result in more oil).
If oil companies were re-investing these new found profits WE WOULD NOT BE HEARING ABOUT SUCH HUGE PROFITS. Because as any moron, including the President, knows that when you invest in things like more production it comes out of your PROFIT.
 

kage69

Lifer
Jul 17, 2003
29,696
42,699
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More good ol boy protection for oil buddies. These goons make me want to vomit. Like Exxon is going to take the majority of their record profits and 're-invest' - c'mon now, what would become of 400million retirements bonuses?!


Speaking of, I heard awhile ago that ol Kenny Boy has finally been brought out for question. Sure was nice for him to have 5 years to re-locate his assets to the state of Florida.

Scumbags.
 

GTaudiophile

Lifer
Oct 24, 2000
29,767
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We all know the oil companies would pass the cost down to consumers. I have no problem with no added tax on them. The problem is supply. New refineries need to be built, oil needs to be extracted from new places, and current refineries need to run at 95-100% capacity, nothing less. Of course, the liberals are preventing much of this from happening with environmental legislation.
 

TheBDB

Diamond Member
Jan 26, 2002
3,176
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Originally posted by: GTaudiophile
We all know the oil companies would pass the cost down to consumers. I have no problem with no added tax on them. The problem is supply. New refineries need to be built, oil needs to be extracted from new places, and current refineries need to run at 95-100% capacity, nothing less. Of course, the liberals are preventing much of this from happening with environmental legislation.

Surely a conservative state like Texas doesn't have tough environmental laws. Have you ever driven past Baytown?? I'm sure they can fit a couple more refineries down there.
 

Stunt

Diamond Member
Jul 17, 2002
9,717
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This is a smart decision. Oil is a commodity and it would be false to expect a declining oil price with taxation of profits. Profit taxation would encourage companies to make cuts elsewhere to ensure stockholders do not feel the impacts (declining valuations and dividends). How would these companies do that? Likely cutting more expensive projects like exploration, carbon dioxide recycling, and other environmental initiatives.

The only way to lower oil consumption is allow it to rise as reserves deplete. If we artificially lower the price we will never turn to alternative energy. People complaining about oil prices is a godsend for environmentalists.
 

Jhhnn

IN MEMORIAM
Nov 11, 1999
62,365
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That's right, GTA, it's the Liberals' fault.

And if you believe that, you probably have investments in Arizona oceanfront, too...

The current situation is the result of Neocon meddling in the Mideast, escalating the price of crude while suppressing production, and of oligopolistic control of the domestic energy market by a few interconnected players under the guise of "Free Market" economics.

Which raises the ultimate questions, none of which the Admin's fanbois are willing to address- What will you pay to be able to go to work, and to hold a job, or to keep from freezing to death in the Winter?

GWB signalled his intentions wrt energy with the fake "Energy Crisis" in California when he took office- we're now experiencing the same sort of fakery on a national scale with the price of gasoline... and heating oil, natural gas, electricity, you name it. Neither Congress or the Admin has any intention of doing anything about it whatsoever, other than perpetuating the shell game...
 

techs

Lifer
Sep 26, 2000
28,559
4
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Originally posted by: Jhhnn
That's right, GTA, it's the Liberals' fault.

And if you believe that, you probably have investments in Arizona oceanfront, too...

The current situation is the result of Neocon meddling in the Mideast, escalating the price of crude while suppressing production, and of oligopolistic control of the domestic energy market by a few interconnected players under the guise of "Free Market" economics.

Which raises the ultimate questions, none of which the Admin's fanbois are willing to address- What will you pay to be able to go to work, and to hold a job, or to keep from freezing to death in the Winter?

GWB signalled his intentions wrt energy with the fake "Energy Crisis" in California when he took office- we're now experiencing the same sort of fakery on a national scale with the price of gasoline... and heating oil, natural gas, electricity, you name it. Neither Congress or the Admin has any intention of doing anything about it whatsoever, other than perpetuating the shell game...
QFT

 

da loser

Platinum Member
Oct 9, 1999
2,037
0
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LMAO, on MEET the PRESS they asked senator dick durban (d-IL) if he would support removing the tax on importing ethanol from brazil. and he said no, the farmers need their subsidy.

also, the secretary of energy is not a good public speaker or debater, like bush. whether he's smart or not, it does not show. they asked him what would happen if saudi arabia are overthrown and prices went up to $100 to $150. he said it would be a bad time to be the secretary. what a buffoon. durban has been smiling everytime this guy opens his mouth.
 
Jun 27, 2005
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Ummm... Oil profits are already taxed.

Y'know... They produce a product and sell it. Then they calculate their expenses and compare them to revenues to determine their profit... then the government takes their "fair share" from that profit.

So now we're supposed to let the government re-evalute the situation and say "Gee... we didn't take enough the first time around... better take another chunk!"??? Where does that end? It's easy to pick on oil companies right now because we're all pissed at the price of gas but if we allow this mentality to succeed who's next? Pharma? That's an easy target. Software? They can afford it. The wealthy! Sure, screw the bastards. How about... YOU? "Gee Mr. Sixpack, looks like you managed to put a few bucks away in your IRA this year... I think we're gonna need some of that back."

I have news for all of you punative taxation people. Businesses don't pay taxes. Their customers pay the taxes for them. Taxes are just another cost of doing business that is passed on to the consumer. So I find it somewhat ironic that the same people who are crying about how much (overt) tax is built into a gallon of gasoline want to add even more taxes (hidden tax) into the equasion.

But I guess if it makes you feel better.... :disgust:
 

Lemon law

Lifer
Nov 6, 2005
20,984
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Partly this is a timing thing------and somewhat of an Enron thing---first GWB signaled that the Federal government would do nothing to prevent electrical energy markets from being manipilated
during the CA power shortage---then GWB rewarded big oil with a pile of tax breaks---and now popular rage will force repeal of these tax breaks--worse yet---their benefactor--GWB---is losing all
public confidence -----but GWB still has two years left---time to start the Enron style ripoffs--because the next President will bring it to a screeching halt--two years is still plenty of time and times a wasting.

If Enron can get away with it, why not big oil--but this time they will be smarter--when finally caught they will blame it all on a few execs who have already moved overseas and out of reach of US justice.
 
Jun 27, 2005
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What are you talking about? What does Enron have to do with taxing oil company profits? Oil profits aren't the result of accounting tricks and shell corporations.

Now if the US oil companies are manipulating the global commodities markets you might have something there... But that would be quite a reach.
 

3chordcharlie

Diamond Member
Mar 30, 2004
9,859
1
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Originally posted by: GTaudiophile
We all know the oil companies would pass the cost down to consumers. I have no problem with no added tax on them. The problem is supply. New refineries need to be built, oil needs to be extracted from new places, and current refineries need to run at 95-100% capacity, nothing less. Of course, the liberals are preventing much of this from happening with environmental legislation.

What is this 'pass the cost down' that you speak of?

If taxes were a 'cost' this would be true, but when you tax a profit that is being maximized already, there's nowhere to pass the cost.

I'm not saying a tax on windfall profits *should* happen, I'm just saying there is no way to pass that cost on to consumers, if it happened; it would come in the form of reduced dividends to shareholders.

A better solution would be a windfall tax that could be easily avoided by reinvesting the profits into the business.
 

Stunt

Diamond Member
Jul 17, 2002
9,717
2
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Originally posted by: 3chordcharlie
Originally posted by: GTaudiophile
We all know the oil companies would pass the cost down to consumers. I have no problem with no added tax on them. The problem is supply. New refineries need to be built, oil needs to be extracted from new places, and current refineries need to run at 95-100% capacity, nothing less. Of course, the liberals are preventing much of this from happening with environmental legislation.
What is this 'pass the cost down' that you speak of?

If taxes were a 'cost' this would be true, but when you tax a profit that is being maximized already, there's nowhere to pass the cost.

I'm not saying a tax on windfall profits *should* happen, I'm just saying there is no way to pass that cost on to consumers, if it happened; it would come in the form of reduced dividends to shareholders.

A better solution would be a windfall tax that could be easily avoided by reinvesting the profits into the business.
How do you know the profit is being 'maximized'. The short term demand for gas is inelastic; oil companies *could* set prices whatever they want. Fact of the matter is, taxing profits will have no effect on the price of the underlying commodity, and will discourage oil companies to invest in environmental plans as the government will be using this additional revenue for some other competitive means, perhaps even giving oil companies subsidies to invest in more environmental efforts. Now that'd be pretty funny.
 

the Chase

Golden Member
Sep 22, 2005
1,403
0
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Socialism has already been proven a failure many times over. Capitalism and a free market economy has so far returned the best results. We once had no income tax at all in this country. The oil companies should be able to make as much money as they can and spend it how they want without fear of unfair taxation. My guess is with them being able to make this much money with their product they will reinvest some of the capital into being able to produce more and thus be able to make even MORE money. Thus stabalizing or even reducing prices. Would you want to work more/invest more of yourself if you knew the government would just rob you of any extra amount that came from your extra efforts?
 

3chordcharlie

Diamond Member
Mar 30, 2004
9,859
1
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Originally posted by: Stunt
Originally posted by: 3chordcharlie
Originally posted by: GTaudiophile
We all know the oil companies would pass the cost down to consumers. I have no problem with no added tax on them. The problem is supply. New refineries need to be built, oil needs to be extracted from new places, and current refineries need to run at 95-100% capacity, nothing less. Of course, the liberals are preventing much of this from happening with environmental legislation.
What is this 'pass the cost down' that you speak of?

If taxes were a 'cost' this would be true, but when you tax a profit that is being maximized already, there's nowhere to pass the cost.

I'm not saying a tax on windfall profits *should* happen, I'm just saying there is no way to pass that cost on to consumers, if it happened; it would come in the form of reduced dividends to shareholders.

A better solution would be a windfall tax that could be easily avoided by reinvesting the profits into the business.
How do you know the profit is being 'maximized'. The short term demand for gas is inelastic; oil companies *could* set prices whatever they want. Fact of the matter is, taxing profits will have no effect on the price of the underlying commodity, and will discourage oil companies to invest in environmental plans as the government will be using this additional revenue for some other competitive means, perhaps even giving oil companies subsidies to invest in more environmental efforts. Now that'd be pretty funny.

No, they can't set them wherever they want without collusion. The price is 'competitive' in the sense that speculation on oil prices has driven them through the roof, but setting prices 'wherever you want' requires monopolistic behavious; while oil companies have market power, and have certainly used that in the past, blatant price fixing would bring regulatory bodies crashing over their heads, they have to be more subtle than that.

Taxing profits is fine; reinvested profits generally aren't taxable because they aren't technically profits. So like I said, an efficient solution in terms of promoting the reinvestment that Bush is talking about (but which current tax laws actually discourage compared to paying out dividends) would be to tax the windfall profits, with an easy escape valve by investing in exploration, efficiency and environmental initiatives, because this would effectively lower the threshold of return necessary to make those investments more profitable than simply paying out the profits.
 

3chordcharlie

Diamond Member
Mar 30, 2004
9,859
1
81
Originally posted by: the Chase
Socialism has already been proven a failure many times over. Capitalism and a free market economy has so far returned the best results. We once had no income tax at all in this country. The oil companies should be able to make as much money as they can and spend it how they want without fear of unfair taxation. My guess is with them being able to make this much money with their product they will reinvest some of the capital into being able to produce more and thus be able to make even MORE money. Thus stabalizing or even reducing prices. Would you want to work more/invest more of yourself if you knew the government would just rob you of any extra amount that came from your extra efforts?

Competition works when there are enough companies that one can't affect the world price. This means every individual company has motivation to produce more, more efficiently, because the more they can sell at the world price, the more they make.

OPEC is an excellent example, historically (not to blame at the moment) of market power leading to a situation where producing less is more profitable than producing more. When companies have market power, the guaranteed benefits of competition go away, and the outcome is obscure at best, and bad for consumers at worst.


Edit:


With the current price of oil, and a groundwell, you could pump it by hand, fill 6 barrels a day, drive it to the refinery in the back of your pickup truck and still make a great living.

Granted many current oil sources are not this easy to tap, but with efficient production methods, there are enough viable oil sources at $35 a barrel to meet world demand; speculation rather than market influence seems to be the problem at the moment, but collusion has been the culprit in the past.

This is a clear case of open markets producing outcomes that may be very much sub-optimal. Personally I have no problem with oil being so expensive, because I think it will drive efficiency and alternate energy sources, but that doens't change the fact that there is no deiscernable reason for oil prices to be so high under a competitive market.
 

dmcowen674

No Lifer
Oct 13, 1999
54,889
47
91
www.alienbabeltech.com
Thanks to the Bushies keeping the status quo, Oil resumes upward price:

5-1-2006 Oil climbs back above $72

Oil edged back above $72 a barrel on Monday, drawing renewed support from Iran's defiant stance in the face of possible U.N. sanctions and a car bombing aimed at the oil industry in Nigeria.
=================
Enjoy
 
Feb 16, 2005
14,068
5,417
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Originally posted by: couppi
Maybe we should just pay Bush $400 mil to go away.

Most I'd give that smacktard is some lint from my pocket and some old gum underneath the railing at a train station.